Trespass is defined as, “No person shall win, work or recover a mineral that is the property of the Crown in the right of Alberta unless he is authorized to do under section 54(1) of the Mines and Minerals Act. To summarize, trespass is defined as terminating in, testing, coring or producing, injecting from undisposed Crown rights without a valid agreement or authorization. Since we deal with minerals, when we refer to trespass, we are referring to sub-surface activities.
No, the well is not in trespass. A company is allowed to drill a maximum of 15 m beyond the Crown leased rights, in accordance with the Alberta Energy Regulator (Regulator) Guide 56. This is to allow the setting of logging tools, so that information can be obtained down to the base of the deepest leased zone drilled. You are not allowed to produce from this overhole portion of the wellbore.
You are allowed to drill through the undisposed Crown rights to get to your leased rights. Logging and taking samples as required by the Regulator is permitted. You cannot test, terminate in or produce from the undisposed Crown rights.
No. You cannot commence any activities after the expiry of the term of your lease until you receive confirmation of lease continuation. You are not guaranteed continuation of these rights based on your application. Any activities such as drilling, testing or placing a well on production after expiry may result in trespass.
You are allowed to drill through the excepted rights to reach the target zone contained in your agreement. Logging and taking samples as required by the Regulator is permitted. You cannot test, terminate or produce from the excepted rights.
You need to know how the excepted rights are defined in comparison to your leased rights. Trespass can occur by misinterpreting a Deeper Rights Reversion Zone Designation (DRRZD) with a Zone Designation (ZD). Information Letter 98-14 outlines how to interpret a DRRZD versus a ZD.
No. If you are producing over expiry, you will at least be granted continuation for the spacing unit for the producing zone. However, a company must ensure they have the rights to the complete spacing unit to avoid action from the Regulator.
As soon as you become aware of the trespass and if you are still producing from the undisposed rights, you should immediately shut-in the well. You then need to contact the Manager of Units and Trespass, Raksha Acharya Phone: 780-427-9072 or Fax: 780-422-5447 to advise of the circumstances. She will request information from you and then determine how you should proceed.
In cases of trespass, you are not allowed to profit from any production and will be required to compensate Alberta Energy for the production, though in some cases you are allowed to deduct costs. You cannot re-commence production until you obtain the rights, usually through the public sale process. All information acquired through trespass must be made public through the Regulator. Alberta Energy will ask you to examine your business practices to ensure that there will not be any re-occurrences.
Private sales of rights are used in very restrictive circumstances only. If the undisposed Crown land is less than 50% of the spacing unit, you should contact the Crown’s P & NG Agreement Sales [Phone: (780) 644-2577 or Fax: (780) 422-1123] to discuss a direct purchase. Information Letters 2005-08 will provide you with the information you need regarding direct purchases.
Trespass means you are obtaining production from rights you do not legally hold. Since you may not profit from this action, you will be required to repay the Crown on any production. By shutting in the well, you are prevented from adding to the amount you will be required to pay and from continuing to profit from an illegal action. You must immediately shut-in the well and you cannot start producing again until you have legally obtained the rights.
Information you have the right to obtain through a P & NG lease or licence provides you with a competitive advantage when you participate at a sale. Information you obtained in trespass provides you with an unfair advantage, as you should not be in possession of the information. In order to maintain the integrity of the sales process, all information obtained in trespass must be made public. Any related postings will be withdrawn from the sale until we are confident that all information obtained in trespass has been made public. Information is made public by forwarding it to the Regulator, along with a letter advising them to make the information public immediately.
We are very firm on the 15m overhole rule. This is the amount allowable, for the purpose of setting logging tools and casing only, under the Regulator’s Guide 56. When a company drills past the 15m, into undisposed rights, it could provide them with an unfair advantage at the land sale. It could also be a safety issue. It is expected that a company knows where the base of their rights are and then add 15m.
The Crown may waive the penalty in exceptional circumstances where our technical staffs agree that a company was unable to identify the base of their agreement due to complex geology. A company is always given the opportunity to provide data to substantiate their actions. Alberta Energy normally requests data such as wells logs (strip/wireline) and daily drilling reports for review.
No. There is no difference to Alberta Energy’s processes whether a company self-declares a trespass or whether Alberta Energy identifies the trespass. However, the Regulator does make allowances when a company self-declares.
All references to overhole are in the Regulator’s regulations/guides. The Regulator uses the term "Total Depth" (Guides 56 & 59). This is also what the Crown refers to as the "measured depth". The total depth, not the true vertical depth, is what is used for reporting and what the Regulator looks at.
A company must be careful about testing. It must be in accordance with the testing criteria outlined in the Regulator’s Guide 60. The Regulator considers testing as production. A company would be in contravention of the Regulator's Oil and Gas Conservation Regulation if they produced without common ownership of a spacing unit.
The Crown may ask for compensation for any unauthorized taking of production.
If a "qualifying" well is drilled pursuant to Section 16 of the Regulation, a company can continue to work on the spacing unit where the qualifying well is located. A company cannot spud any other wells in another spacing unit and must select the spacing unit as one of the nine allowable sections for continuation to avoid trespass.
A company is always given the opportunity to provide data to substantiate their actions. Alberta Energy normally requests data such as wells logs (strip/wireline) and daily drilling reports for review.
Road allowances are undisposed Crown land. Your P&NG lease or license does not include the rights to any road allowance that lies adjacent to the sections of land contained in your agreement. You can drill through a road allowance to reach mineral rights you do have but you cannot test or produce from any rights within the road allowance or terminate in the road allowance without prior approval from Alberta Energy.
By policy only, road allowances within units are treated as part of the unit. Tract factors have already been negotiated for the unitized area and allow for the allocation of production and costs. Alberta Energy allows you to access the road allowance to test or produce your unitized zones without permission. If it is not a unitized zone you will be drilling, you would need to request prior approval from Alberta Energy.
In order to use undisposed Crown land you must first request permission from the Wells and Undisposed Crown Rights area of Alberta Energy [Phone: (780) 427-7749 or Fax: (780) 422-0382]. Crown Mineral Activity Applications/Authorizations (previously known as Well Authorizations) are now available through ETS at http://www.energy.alberta.ca/includes/1076.asp
Information Letter 2011-09 outlines the process. You will need to indemnify the Crown as well.
In order to help you determine when prior approval is required, click on the link to the illustrations that outline some of the common road allowance scenarios.